Homework SourseAn income statement for Sams Bookstore for the first quarter
An income statement for Sam\'s Bookstore for the first quarter of the year is presented below:
On average, a book sells for $70. Variable selling expenses are $5 per book with the remaining selling expenses being fixed. The variable administrative expenses are 4% of sales with the remainder being fixed.
The contribution margin for Sam\'s Bookstore for the first quarter is:
| Sam\'s Bookstore | ||||
| Income Statement | ||||
| For Quarter Ended March 31 | ||||
| Sales | $ | 840,000 | ||
| Cost of goods sold | 520,000 | |||
| Gross margin | 320,000 | |||
| Selling and administrative expenses | ||||
| Selling | $ | 111,000 | ||
| Administration | 126,000 | 237,000 | ||
| Net operating income | $ | 83,000 | ||
Solution
answer
contribution margin:
contribution margin=sales-variable expenses
number of books sold = 840000/70
= 12000
gross margin = 320000
less: expenses
variable selling expenses = (12000*5) 60000
variable administrative expenses = 840000*4%
= 33600
contribution margin = 226400
answer = 226400
